GEOGRAPHY AND PEOPLEEast Timor is located in Southeast Asia, on the southernmost edge of the Indonesian archipelago, northwest of Australia. The country includes the eastern half of Timor island as well as the Oecussi enclave in the northwest portion of Indonesian West Timor, and the islands of Atauro and Jaco. The mixed Malay and Pacific Islander culture of the Timorese people reflects the geography of the country on the border of those two cultural areas. Portuguese influence during the centuries of colonial rule resulted in a substantial majority of the population identifying itself as Roman Catholic. Some of those who consider themselves Catholic practice a mixed form of religion that includes local animist customs. As a result of the colonial education system and the 23-year Indonesian occupation, approximately 13.5% of Timorese speak Portuguese, 43.3% speak Bahasa Indonesia, and 5.8% speak English, according to the 2004 census. Tetum, the most common of the local languages, is spoken by approximately 91% of the population, although only 46.2% speak Tetum Prasa, the form of Tetum dominant in the Dili district. Mambae, Kemak, and Fataluku are also widely spoken. This linguistic diversity is enshrined in the country's constitution, which designates Portuguese and Tetum as official languages and English and Bahasa Indonesia as working languages.

HISTORYPortuguese and Dutch traders made the first western contact with East Timor in the early 16th century. Sandalwood and spice traders, as well as missionaries, maintained sporadic contact with the island until 1642, when the Portuguese moved into Timor in strength. The Portuguese and the Dutch, based at the western end of the island in Kupang, battled for influence until the present-day borders were agreed to by the colonial powers in 1906. Imperial Japan occupied East Timor from 1942-45. Portugal resumed colonial authority over East Timor in 1945 after the Japanese defeat in World War II.

Following a military coup in Lisbon in April 1974, Portugal began a rapid and disorganized decolonization process in most of its overseas territories, including East Timor. Political tensions--exacerbated by Indonesian involvement--heated up, and on August 11, 1975, the Timorese Democratic Union Party (UDT) launched a coup d'�tat in Dili. The putsch was followed by a brief but bloody civil war in which the Revolutionary Front for an Independent East Timor (FRETILIN) pushed UDT forces into Indonesian West Timor. Shortly after the FRETILIN victory in late September, Indonesian forces began incursions into East Timor. On October 16, five journalists from Australia, Britain, and New Zealand were murdered in the East Timorese town of Balibo shortly after they had filmed regular Indonesian army troops invading East Timorese territory. On November 28, FRETILIN declared East Timor an independent state, and Indonesia responded by launching a full-scale military invasion on December 7. On December 22, 1975 the UN Security Council called on Indonesia to withdraw its troops from East Timor.

Declaring a provisional government made up of Timorese allies on January 13, 1976, the Indonesian Government said it was acting to forestall civil strife in East Timor and to prevent the consolidation of power by the FRETILIN party. The Indonesians claimed that FRETILIN was communist in nature, while the party's leadership described itself as social democratic. Coming on the heels of the communist victories in Vietnam, Cambodia, and Laos, the Indonesian claims were accepted by many in the West. Major powers also had little incentive to confront Indonesia over a territory seen as peripheral to their security interests. Nonetheless, the widespread popular support shown for the guerilla resistance launched by the Timorese made clear that the Indonesian occupation was not welcome. The Timorese were not permitted to determine their own political fate via a free vote, and the Indonesian occupation was never recognized by the United Nations.

The Indonesian occupation of Timor was initially characterized by a program of brutal military repression. Beginning in the late 1980s, however, the occupation was increasingly characterized by programs to win the "hearts-and-minds" of the Timorese through the use of economic development assistance and job creation while maintaining a strict policy of political repression, although serious human rights violations--such as the 1991 Santa Cruz massacre--continued. Estimates of the number of Timorese who lost their lives to violence and hunger during the Indonesian occupation range from 100,000 to 250,000. On January 27, 1999, Indonesian President B.J. Habibie announced his government's desire to hold a referendum in which the people of East Timor would chose between autonomy within Indonesia and independence. Under an agreement among the United Nations, Portugal, and Indonesia, the referendum was held on August 30, 1999. When the results were announced on September 4--78% voted for independence with a 98.6% turnout--Timorese militias organized and supported by the Indonesian military (TNI) commenced a large-scale, scorched-earth campaign of retribution. While pro-independence FALINTIL guerillas remained cantoned in UN-supervised camps, the militia and the TNI killed approximately 1,300 Timorese and forcibly relocated as many as 300,000 people into West Timor as refugees. The majority of the country's infrastructure, including homes, irrigation systems, water supply systems, and schools, and nearly 100% of the country's electrical grid were destroyed. On September 20, 1999 the Australian-led peacekeeping troops of the International Force for East Timor (INTERFET) deployed to the country, bringing the violence to an end.

GOVERNMENT AND POLITICAL CONDITIONSEast Timor became a fully independent republic on May 20, 2002, following approximately two and a half years under the authority of the UN Transitional Administration in East Timor (UNTAET). The country has a parliamentary form of government with its first parliament formed from the 88-member Constituent Assembly chosen in free and fair, UN-supervised elections in August 2001. The 29-member Cabinet is dominated by the FRETILIN Party, which won the majority of Assembly seats. Mari Alkatiri, FRETILIN's Secretary General, was the first Prime Minister and Head of Government, and Xanana Gusmao--elected in free and fair elections on April 14, 2002--is President and Head of State. UNTAET's mandate ended with East Timor's independence, but a successor organization, the UN Mission for the Support of East Timor (UNMISET), was established to provide additional support to the government. UNMISET's mandate expired on May 20, 2005 after the UN Security Council unanimously approved the creation of a small special political mission in East Timor, the UN Office in East Timor (UNOTIL), to take its place.

Under the constitution ratified in March 2002, "laws and regulations in force continue to be applicable to all matters except to the extent that they are inconsistent with the Constitution." Many Indonesian and UNTAET laws and regulations remain in effect, but are being gradually replaced by RDTL laws. During the period from December 2004 to September 2005, the government held local elections in all 13 districts. East Timor witnessed its largest and longest political demonstration in April and May 2005 when several thousand protestors took part in a protest about a broad array of religious and political issues led by the Catholic Church that lasted 20 days. The demonstration ended peacefully with the signing of an agreement between the Catholic Church and Prime Minister Alkatiri that resolved several key issues of disagreement.

Despite the winding down of the UN presence in country, the institutions comprising East Timor's armed forces (F-FDTL) and police (PNTL) remained fragile and the authority of the state much more tenuous than most observers assumed at the time. In February 2006, approximately 400 military personnel (from a total military strength of 1,400) petitioned President Gusmao to address their complaints of discrimination against "westerners" or Loro Monu people by "easterners" or Loro Sae people in the military. Shortly after presenting their petition, they left their posts and approximately one month later were dismissed by the F-FDTL commander. In late April the petitioners group staged protests in Dili. On April 28, the protests turned violent . Citing ineffective police response, the government called in the armed forces (F-FDTL) to respond. The rioting and the police and military response resulted in six confirmed deaths. In response to the events of April 28, large numbers of people began to flee their homes for internally displaced persons (IDP) camps or the outlying districts and several members of the F-FDTL, including the commander of the Military Police, left their posts in protest of the military intervention.

During a FRETILIN Party Congress in mid-May, Prime Minister Alkatiri was re-elected as Secretary General after his supporters successfully amended the party constitution to substitute secret ballots with an open vote. Against this political backdrop, a series of deadly clashes between the F-FDTL and forces comprising dissident military, civilians and some police took place on May 23-24, followed by deadly conflict between the F-FDTL and the PNTL on May 25. In the aftermath of these clashes, which effectively caused the dissolution of law and order, mob and gang violence took over the capital, resulting in additional deaths, widespread destruction of property, and the continued displacement of thousands of Dili residents. At the peak of the crisis, approximately 80,000 IDPs were in the districts and approximately 70,000 were residing in camps within Dili.

The U.S. Agency for International Development (USAID) and international relief organizations have provided vital services to the camps that include water and sanitation facilities, camp management support, hygiene kits, and mosquito nets. USAID has also supported East Timor's independent public radio and television broadcast services in order to ensure that reliable and timely information about current political events reaches East Timor's citizens.

On May 28, the Government of East Timor requested the Governments of Australia, Malaysia, New Zealand, and Portugal to send security forces to stabilize the country. By July 2006 there were approximately 2,200 international military and police officers in East Timor. During the month of June, there was increasing pressure on then Prime Minister Mari Alkatiri to resign as criticisms of his handling of the crisis mounted. Moreover, serious allegations emerged that he had been involved in illegal arms distribution. In June, former Minister of Interior Rogerio Lobato was arrested on the charge of distributing the above-mentioned weapons and placed under house arrest. Following President Xanana Gusmao's public request that the prime minister step down, accompanied by a threat to resign himself if Alkatiri remained in office, Alkatiri resigned on June 27. Anti-Alkatiri demonstrations, which kicked off on June 28, with most participants coming from the western districts, turned into partial celebrations following the prime minister's resignation and lasted for several days. Similar numbers of demonstrators entered Dili from the eastern districts the following week to voice support for Alkatiri and the ruling Fretilin party.

After President Gusmao held consultations with the leadership of the FRETILIN Party, Jose Ramos-Horta--East Timor's Foreign and Defense Minister in the Alkatiri government--became Prime Minister on July 10. Prime Minister Ramos-Horta's new cabinet was sworn in on July 14, 2006. Ramos-Horta said the "immediate task of his Government is to consolidate security in Dili and in all of Timor-Leste and to put in place the necessary conditions to enable displaced Timorese to return home and rebuild their lives."

As requested by the Government of East Timor, the UN Security Council passed resolutions to roll over the small UN political mission, UNOTIL until August 25, 2006 while its members considered the mandate of a larger follow-on UN mission to help East Timor overcome its crisis. The United States coordinated closely with members of the Core Group on East Timor (Australia, Brazil, Japan, New Zealand, Portugal, and the United Kingdom) and the EU to obtain approval of the UN Integrated Mission in Timor-Leste (UNMIT), which provides for a UN-led policing component of up to 1,608 personnel. UNMIT's mandate, set forth in UN Security Council Resolution 1704 approved on August 25, 2006, calls for the UN mission to assist in restoring stability, rebuilding the institutions comprising the security sector, supporting the Government of East Timor in conducting presidential and parliamentary elections (expected in the spring of 2007), achieving accountability for the crimes against humanitiy and other atrocities committed in 1999, among other aims. (UNMIT's own website provides additional information: http://www.un.org/Depts/dpko/missions/unmit/ )

Although security in Dili has been significantly improved in comparison to the violence and anarchy that reigned in May and June, neither the establishment of a new government nor the expansion of the UN mission has reduced the levels of violence and criminality to their pre-April 2006 levels. Indeed, in October, shortly after the UN Special Commission of Inquiry issued its report on responsibility for the security crisis of April-June, Dili experienced a surge of violence that led to several deaths and the closure of the international airport for a day. While the overwhelming majority of the current violence is Timorese-on-Timorese perpetrated by gangs or martial arts groups, foreign nationals have also been targeted. Differences between Loro Sae and Loro Monu have recently subsided and been overtaken by long-standing conflicts between members of competing groups, including martial arts groups and semi-religious sects. While much of the current fighting reflects a continuing lack of law and order underscored by the absence of judicial accountability, many observers note that communal and gang violence has been employed in many cases toward political ends.

As of December 2006, over 28,000 displaced persons remain in 29 camps in and around Dili, representing over 4,000 families, 45 percent of whom have houses that have been destroyed. Over 2,000 houses were destroyed over the last months, and many more damaged. Another 70,000 or so IDPs remain in the outlying districts. November and December 2006 featured public efforts by the Timorese leadership to foster a spirit of reconciliation - particularly among members of the armed forces and the police - but key issues remain outstanding, including the lack of resolution of the petitioners' case and the continued presence of armed military dissidents. Police functions in Dili are currently under UN control, while members of the PNTL are being gradually reintegrated into city policing following vetting for criminal or ethical violations. UN officials and other observers expect the reform of the country's security sector to be a long-term challenge.

Principal Government OfficialsHead of State (President)--Kay Rala Xanana GusmaoHead of Government (Prime Minister)--Jose Ramos-Horta Minister of Foreign Affairs--Jose Luis Guterres Ambassador to the United Nations—Mrs. Sofia Borges, Acting Permanent RepresentativeAmbassador to the United States--Mr. Constancio Pinto, Charge d'Affaires a.i.

ECONOMYAs the poorest nation in Asia, East Timor must overcome formidable challenges. Basic income, health, and literacy indicators are among the lowest in Asia. Severe shortages of trained and competent personnel to staff newly established executive, legislative, and judicial institutions hinder progress. Rural areas, lacking in infrastructure and resources, remain brutally poor, and the relatively few urban areas cannot provide adequate jobs for the country's growing labor force. Many cities, including the country's second largest, Baucau, do not have routine electrical service. Rural families' access to electricity and clean water is very limited. Unemployment and underemployment combined are estimated to be as high as 70%. While revenues from offshore oil and gas reserves offer great hope for the country, effective use of those resources will require a major transformation of the country's current human and institutional infrastructure. Meanwhile, as those substantial revenues come on line, foreign assistance levels--now standing at among the highest worldwide on a per capita basis--will likely taper off.

East Timor has made significant progress in a number of areas since independence. It has become a full-fledged member of the international community, joining the United Nations, the International Monetary Fund, the World Bank, and the Asian Development Bank (ADB). The Government of East Timor has drafted a National Development Plan, and its Constituent Assembly has transitioned into a National Parliament that has commenced reviewing and passing legislation. In July 2005, Parliament unanimously passed a law creating a petroleum fund to effectively manage and invest oil revenues to ensure these funds are invested in the country's development after exploitation of these resources ends. While a nascent legal system has been put into place, the justice system remains among the weakest performing sector of government, still unable to perform its most basic functions without substantial assistance by outside professionals. Efforts are underway to put in place the institutions required to protect human rights, rebuild the economy, create employment opportunities, and reestablish essential public services.

FOREIGN RELATIONSEast Timor joined the United Nations on September 27, 2002. It is pursuing membership in the Association of Southeast Asian Nations (ASEAN) and became a member of the ASEAN Regional Forum (ARF) in July 2005. East Timor's foreign policy has placed a high priority on its relationships with Indonesia; regional friends such as Malaysia and Singapore; and donors such as Australia, the United States, the European Union, Japan, and Portugal.

Indonesia-East Timor RelationsEast Timor and Indonesia have full diplomatic relations. In 2005 Indonesian President Susilo Bambang Yudhoyono made a successful trip to East Timor, including a visit to the Santa Cruz cemetery in Dili where Indonesian troops had massacred hundreds of Timorese in 1991. Yudhoyono prayed and laid a heart-shaped wreath at the cemetery, symbolizing the improving ties between the two nations. After the Indian Ocean tsunami devastated parts of Indonesia, the East Timor Government contributed humanitarian assistance to the victims. Likewise, the Indonesian Government has sent humanitarian assistance to help those displaced by the unrest in Dili this year.

In 2005, both nations created a bilateral Truth and Friendship Commission (TFC) in order "to establish the conclusive truth in regard to the events prior to and immediately after the popular consultation in 1999, with a view to promoting reconciliation and friendship, and ensuring the non-recurrence of similar events." The United States has encouraged both Indonesia and East Timor to ensure that the TFC achieves a credible outcome and that the TFC process is transparent, holds public hearings, has international participation, and names the names of those individuals who perpetrated the serious crimes. Respected international human rights groups, however, have criticized the TFC because its limited terms of reference for achieving these ends do not provide for prosecutions or similar measures to achieve accountability, and because the TFC has made no clear progress to date.

U.S.-EAST TIMOR RELATIONSEast Timor maintains an embassy in Washington, DC, as well as a Permanent Mission in New York at the United Nations. The United States has a large bilateral development assistance program--$23.3 million in fiscal year 2005--and also contributes funds as a major member of a number of multilateral agencies such as the Asian Development Bank and World Bank. The U.S. Peace Corps has operated in East Timor since 2002, but it ceased operations in May 2006 due to the unrest and instability.